Study: Natural gas will play key role in energy future of US

May 8, 2019
Natural gas will continue to play a key role in America’s economic growth and overall energy future in the coming decades as the country makes a transition to a low-carbon economy, a study commissioned by the INGAA Foundation concluded.

Natural gas will continue to play a key role in America’s economic growth and overall energy future in the coming decades as the country makes a transition to a low-carbon economy, a study commissioned by the INGAA Foundation concluded.

“As demonstrated by this report, America’s natural gas will serve both domestic and global needs for many years to come,” said Donald F. Santa, president of the Interstate Natural Gas Association of America and its foundation.

Conducted by Black & Veatch Management Consulting, the study—“The Role of Natural Gas in the Transition to a Lower-Carbon Economy”—presents a comprehensive analysis of the future role of gas and gas infrastructure in a greener economy over a 20-year period (2020-40).

It analyzes and compares two scenarios: one representing a balance of policy initiatives and market economics and a second representing a transition heavily driven by policies that is intended to accelerate the penetration of renewable fuels in electricity generation.

Gas plays a key role in a transition to a greener economy under both scenarios, and pipelines and other transmission systems will still be needed, the study indicated.

Ramp-up generation needs

According to the report, the intermittent nature of solar and wind power generation will intensify the need for flexible, nimble, fast ramp-up generation that gas would provide to maintain the US electricity grind’s reliability.

Gas-fired generation will require additional, flexible transmission services to balance the growth in renewable generation and support electric grid reliability. New pipeline capacity will support this transition, the study said.

“Despite the steadily increasing consumption of natural gas, opponents of gas infrastructure projects argue that increased renewable penetration will decrease the demand for gas-fired generation, thereby leaving gas transmission assets stranded,” it noted.

“Demand for gas transportation services from the power sector, however, has not been the primary driver for recently proposed pipeline projects. Rather, other sectors have been the primary drivers of new pipeline infrastructure investments and utilize the majority of existing gas pipeline capacity. These shippers will continue to rely on natural gas and [its] infrastructure, even as demand for renewable energy increases,” the study said.

Other influences

Gas usage trends in traditional end use sectors (residential, commercial, and industrial) and nontraditional sectors (LNG exports and pipeline exports to Mexico) will also largely affect how the nation’s gas transportation systems will be utilized to meet the needs of all energy consumers safely and reliably, it said.

The continued development of renewable resources across the country, coupled with slower than expected electric load growth, has dampened the need for new baseload generation capacity, the study said. At the same time, the need for dispatchable generation that can quickly ramp up and down has grown, it pointed out.

“In California, for example, the continued addition of solar resources has significantly changed the typical daily net load profile, with a deep midday drop and steep ramp rates in later afternoon and early evening hours. In West Texas, the significant amount of wind capacity has frequently driven electricity prices into the negative during the off-peak hours,” the study said.

“The duration and magnitude of this kind of shift across the country will affect the amount, timing, and duration of demand for natural gas to support the power generation sector and how pipelines and storage facilities will be utilized to facilitate renewable energy growth,” it suggested.

Global and US initiatives to create a lower carbon economy will also affect traditional and nontraditional power demand sectors, the study said. “North America’s entrance into the global LNG market will provide Asian and European consumers with the benefits of competition that includes a low-cost supplier. US LNG exports are expected to continue to grow over the 20-year analysis period and are expected to have a sustained impact on the need for natural gas infrastructure,” it said.

Contact Nick Snow at [email protected].

About the Author

Nick Snow

NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.